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My twitter feed today is full of tweets from shareholders in US Oil & Gas (USOP) who seem to think they have firm evidence that they are on to a winner. In the immortal words of Don and Phil:”Dream, dream, dream… only trouble is, gee whizz, I’m dreaming my life away.”
OK there is a statement. The Ebiana well has found oil. Gee whizz. Two zones. Gee whizz. One zone has an API of 28.5 and another 33. Okay- so what is the flow rate? How much oil is there? Is it a commercial find? Er….During one 48 hour test oil and water flowed. We do not know what the flow rate was & what it might be on a sustainable basis nor do we have any idea of the resource. The company asserts ”Although current indications are that the well may prove to be commercial, the Company wishes to emphasise that testing is still at an early stage and no headline flow rates are available at this point.”
Sorry fellows but if you do not know a sustainable flow rate, the reserve or the capital cost of any project how on earth can you say that there are indications that the well may prove to be commercial? You just cannot say that on the information you have. You are in Everley Brothers land again.US is now pausing testing to analyse its data and will start again in two months. Meanwhile with its shares traded on the joke GXG Market the shares trade (with a spread wide enough to drive a bus through) at £1.09 valuing US Oil & Gas at £45 million.I have explained before why this valuation is a farce HERE
If USOP shareholders thinks that this release proves you have a commercial find, let alone one big enough to justify the share price, heaven help you all.
Should US Oil & Gas wish to sue me for pointing out this statement of the bleeding obvious, I suggest contacting law firm Pinsent Masons who might do you a 2 for 1 offer on bringing a libel case for another hopelessly overvalued company with fast dwindling cash and operating in the USA.
Tom Winnifrith writes for 10 UK and US websites pulling no punches at all. To get links to all his free to access articles follow him on twitter @tomwinnifrith
You can also get links to all his pieces on his own website www.TomWinnifrith.com which today also contains comment on the Welsh and an article based on an interview with Leyshon Resources plus another 5 articles to come.
Amen to that. They must know what the flow rate was. They must know what the approx water content was. No need for analysis to confirm that data – so why not spill the beans? The signs are very ominous imho.
Will hold my hands up and say I’ve been mugged off here! Believed some of the hype and took a punt at £4. Knew Doomsday was close by when Nov results came out and legal action and other issues have not helped. The harsh reality is this new release does not add much, they should know flow rate, water to oil ratios by now – in my opinion. If you have zones ID’d surely you can provide some data on flow. And why the commercial reserve comment?